Non-Profit CouchSurfing Raises Millions In Funding

In the latest indication Silicon Valley is in the midst of a new technology bubble, CouchSurfing.org, a non-profit website that connects global travelers with locals, has opted to accept $7.6 million in funding from Benchmark Capital and Omidyar Network. In conjunction with the funding, CouchSurfing will convert from its non-profit status to that of a B Corporation. (The B stands for "benefit.") Benefit Corporations are for-profit businesses that define themselves as socially responsible to investors and consumers.

"The non-profit structure is not ideal in enabling innovation to occur in terms of regulatory oversight and various auditing requirements," says Daniel Hoffer, CouchSurfing's co-founder turned President and CEO. "B Corporation status allows us to take investment money and be nimble and flexible while sticking with our social mission."

It will also allow the start-up to begin profiting off its three million large member base. Until now, CouchSurfing's only revenue stream was its paid identification verification service which charges members a tiny fee to prove they are who they say they are. Hoffer insists CouchSurfing will continue to make its service free to users and is currently exploring alternative revenue streams. The first order of business, Hoffer says, will be "aggressive hiring" especially at the technical level. Until now, CouchSurfing has bootstrapped its 30-employee organization with the help of thousands of passionate volunteers who set up CouchSurfing "meet-ups" around the globe.

The news is timed one month after another couch surfing website, Tripping.com, announced it had secured over a million in seed funding from Quest Venture Partners and a group of undisclosed angel investors. Tripping.com only claims "thousands" of members and one has to wonder whether CouchSurfing developed a sudden inferiority complex upon hearing news that its smaller, new, for-profit rival was suddenly flush with cash.

Regardless of the reasons for the investment, venture capitalists are thrilled the organization has accepted their money: "CouchSurfing is the leader in doing what it does," says Matt Cohler, who led the investment for Benchmark and will take a board seat in conjunction with the funding. "Nobody else in the world has such a strong vibrant community and such a deeply engaged active network of people."

CouchSurfing boasts a surprisingly large user base of three million people in 81,000 cities. Some 5.6 million connections have taken place on the site-- whether that's people sharing a couch, a coffee, or simply local knowledge of the best bars, restaurants and sight-seeing spots with other diehard CouchSurfers. The organization recently learned that a Mongolian livestock farmer has hosted over 100 CouchSurfers in his yurt in the capital of Mongolia.

"I don't know even how he has internet access," says Hoffer. "But they've cooked dinner together. Westerners have learned what it's like to live in a yurt and tend livestock and the farmer has learned more about Westerners."